Beyond Writing the Check - Philanthropy and Impact Investing
Commentary & Opinion: Beyond Writing the Check - Philanthropy and Impact Investing
Through my work with individuals and organizations around the globe, I've seen an opportunity and a need for creative solutions to the global challenges we face. In a globalized world, the problems of seemingly distant places like Africa, the Middle East, and Central Asia affect us every day, with violence and poverty contributing to global instability, piracy, and even terrorism. It's clear we need to work together to find approaches that have lasting impact in the real world. From my work in the nonprofit world, I also know that many philanthropically minded people have grown weary of simply writing checks. With a challenging economic environment and the growing number of issues we face, it's time for a different approach.
My quest for a new approach started as a conversation over dinner with a friend. After I spent a good portion of the dinner describing in detail the shrinking pool of funding for philanthropic endeavors, my friend asked, "Have you ever thought about the financial markets?" My initial thought was that the markets were too complicated and driven by too many variables to ever appeal to philanthropically minded funders. But the seed had been planted. Eventually, curiosity got the better of me, and I started to look around for innovative market models that create positive impact for investors — and society — beyond financial returns. That's how I heard about impact investing, and the more I learned, the more impressed I became.
Total annual charitable giving in the United States has averaged about $300 billion over the last few years. In contrast, the amount allocated to impact investing, according to the Calvert Foundation, is around $3 trillion. You don't have to be a genius to do the math: while there's no substitute for pure philanthropy, the dollars allocated to individual and institutional philanthropy every year are nowhere near enough to solve the challenges we face, whereas impact investing has the potential to dramatically increase the funds used to address the world's most urgent problems.
As I soon learned, however, most impact investing platforms are complex and limited to accredited investors of means. To effectively strengthen and grow the impact investing market, someone needed to develop a financial instrument that was more transparent and accessible to individuals who wanted to align their investments with their values. With a little digging, I also learned that there were no actively managed exchange-traded funds (ETFs) with a mandate to track the kinds of sustainable investments the world so desperately needs. You can see where this is going. Eventually, I realized that if I wanted to leverage the enormous power of Wall Street to do good and increase the philanthropic funds available for the causes I believe in, I would have to develop such a fund myself. Thus was born the GlobalEcho Fund and Foundation.
The GlobalECHO Foundation is sponsored by AdvisorShares Investments, which contributes a portion of its standard management fee from the Global Echo ETF, a broadly diversified, actively managed exchange-traded fund listed on the New York Stock Exchange under the ticker symbol GIVE. In a very real and tangible sense, the fund and the foundation enable anyone to become part of the solution by leveraging the power of their investments to build a sustainable future. Indeed, they bring new meaning to the phrase "doing well while doing good."
At the same time, it was important to me that the GlobalECHO Foundation had a strong focus on timely issues and causes with the potential to "move the needle" globally when afforded sufficient attention and resources. The sad truth is that there is an overwhelming number of global challenges to choose from. In structuring GlobalECHO, I drew on my personal experience, the sage advice of partners and advisors, and the wisdom of my grandfather, Jacques Cousteau. My grandfather always told me that we cannot have environmental sustainability without human sustainability. And empowering women, he said, is the key to building that sustainability. Inspired by his legacy, the foundation supports three areas of focus: women and children, microenterprise, and environmental education.
As with any new venture, learning as you go is part of the journey. Creating and launching the fund was hard enough, but I have learned since that more education is needed. A lot of our time now is spent helping to spread the word — not only about GIVE but about the power of impact investing in general and working to correct the misconception that one has to sacrifice returns in order to invest with impact. Not so. In fact, one prominent investor told me that during the 2008 financial crisis, his impact investments were the best-performing asset class in his portfolio overall. People are reluctant to embrace new ideas, however, and so our journey continues.
Therefore, it is fitting that the GlobalECHO Foundation just announced its inaugural project at the Clinton Global Initiative's eighth annual meeting. As a participant in past CGI meetings, I know firsthand the power of interacting with individuals and organizations committed to collaboration, positive change, and taking action. The GlobalECHO Foundation has joined with CGI to launch our first commitment — supporting the Panzi Hospital in the Democratic Republic of Congo, a country where unrest and devastating hardship are facts of daily life. World renowned for its work on reproductive health and the advancement of women's rights, Panzi Hospital is a beacon of hope in an impoverished region and provides a range of resources and support to the local people, from basic health care and educational programs to critical support for survivors of rape and violence. Through our CGI commitment, the GlobalECHO Foundation will help fund the installation of solar panels that power the entire hospital, securing a sustainable source of energy that can be used to provide hot water and warm meals for patients while boosting the capacity of hospital staff to perform life-saving surgeries.
Now that's my idea of investing in the future.
Philippe Cousteau is the board chair of the GlobalECHO Foundation, president of EarthEcho International, and co-founder of Azure Worldwide. For more information on the Global Echo Fund (NYSE GIVE), visit www.advisorshares.com/fund/give.